Article | Open Access | Published: 5 January 2021
What Determines a Dividend Policy of Listed Non-Financial Firms of Pakistan
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Abstract:
This study is aimed at finding the key determinants of consistent dividend-paying non-financial firms of Pakistan. The study uses data of non-financial firms of Pakistan that are listed at the Pakistan Stock Exchange. The secondary data is collected for 91 non-financial firms from their annual reports from 2012 to 2018. Hypotheses have been tested using the fixed effects regression technique which was confirmed through the Hausman specification test. OLS pooled regression was applied to investigate the impact of the ROA, financial leverage, corporate tax, and firm size on the dividend payout ratio. The result of the study is as follows: DPR was found to have a positive significant relationship with financial leverage, corporate tax, and firm size whereas its association with profitability was found to be insignificant. There were few limitations to the current study; the foremost among them were resource and time constraints that somehow restricted the entire research to narrow down the scope and domain. At the same time, comparatively smaller sample size and consideration to specific non-financial sectors restrained its generalizability to a larger proportion and applicability as well. Corporate managers should be more inclined towards retaining earnings in times of high taxes than paying out dividends making the financial health of the firm their utmost priority. The firms should focus on the efficient use of their resources to improve performance as well as their ability to pay dividends without getting buried under debts. In the non-financial sector, most firms do not pay regular dividends. Firms should follow stable dividend policies to attract foreign and local potential investors.
Keywords:
Dividend Payout Ratio, Non-Financial firms, Panel Data Analysis.
Publisher:
ILMA UNIVERSITY
Published:
5 January 2021
Issue:
Issue 2 : Volume 16
E-ISSN:
2409-6520
P-ISSN:
2414-8393
This is an open access article distributed under the terms of the Creative Commons Attribution CC BY 4.0 license, which permits any use, distribution, and reproduction of the work without further permission provided the original author(s) and source are credited.